Port strikes will 'disproportionately' hit America's auto industry, Goldman says

By Louis Goss

Port strikes in the U.S. are likely to have a relatively minor impact on America's gross domestic product while serving a disproportionate hit to retailers and manufacturers in sectors that are heavily reliant on seaborne trade including the auto industry, Goldman Sachs said.

The International Longshoremen's Association (ILA) strike on Tuesday saw 45,000 dock workers walk out their jobs indefinitely, in a shutdown of 14 major ports and a larger group of smaller ports on the U.S.'s Gulf and East coasts.

In launching industrial action, the dockworker's union, which represents 85,000 port workers across the U.S., is calling for a 61.5% pay rise in its next six-year contract renewal and a ban on the automation of cranes, gates, and container-moving trucks.

Goldman Sachs said the port strikes are likely to have a relatively minor impact on U.S. gross domestic product while warning the shutdown is likely to have a much larger impact on trade volumes that will have a disproportionate impact on certain industries.

"The strike will disproportionately negatively affect the clothing, furniture, home appliance, food product, and auto industries because of their high exposure to imports and commodity-based industries including plastic, wood/paper, and auto manufacturers because they rely on ports to export," Goldman Sachs analysts, led by Jan Hatzius, said in a note.

Goldman's analysts noted the majority of transportation sector strikes since 2000 have lasted less than two-weeks, with larger strikes having generally lasted for periods of less than a week, likely due to the disruption they are able to generate.

The ILA port strike is significantly larger than any other transportation sector strike seen since the turn of the millennium, with the previous record held by the New York City Metro strike in 2005 that saw 35,000 workers walk off the job for two days from Dec. 20- 22.

Goldman's analysts said a 10-day ILA strike would likely have a 0.2% negative impact on the U.S. GDP in the fourth quarter of 2024 and lead to a slowing of payroll growth in reducing the October figures by around 45,000 jobs.

Instead, the strikes are likely to have their harshest impact on specific industries that heavily rely on imports and exports, in shutting down East and Gulf coast ports that deal with around half of the U.S.'s seaborne trade volumes.

In the immediate term, the strikes are likely to impact hiring and production plans in those sectors that are particularly reliant on imports and exports through America's ports, including the auto manufacturing sector.

If the port strikes last longer than expected, U.S. producers and manufacturers could be forced to scale down production, in what could lead to a sharper hit to America's GDP, Goldman's analysts said.

-Louis Goss

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10-02-24 0537ET

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